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Standing and Exchange Act Section 16(b)

On October 1st, the Second Circuit addressed Constitutional standing under Section 16(b) of the Securities Exchange Act of 1934. Plaintiff, an Invesco shareholder, sued defendants derivatively for the short-swing profits defendants realized in violation of Section 16(b). The Second Circuit holds that as a beneficial owner of more than 10 percent of Invesco's stock, defendants owed Invesco (and therefore plaintiff) a fiduciary duty which conferred upon Invesco an enforceable legal right to expect defendants to refrain from engaging in short-swing trading. The deprivation of that right conferred standing upon plaintiff even if Invesco suffered no other injury as a result of defendants' trading. Donoghue v. Bulldog Investors General Partnership.